20. In actual practice, short-term interest rates and long-term interest rates usually move together; this isthe main weakness ofA) segmented markets theory.B) expectations theory.C) liquidity premium theory.D) separable markets theory.21. An unexpected decrease in the price level increases the debt burden on the borrower company butdoes not increase the real value of the lender company's assets. The result of this condition isA) the real net worth of the lenders' firms declines.B) adverse selection and moral hazard problems are reduced.C) increase in real net worth from the perspective of the borrower company.D) increase in lending.

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20. In actual practice, short-term interest rates and long-term interest rates usually move together; this is the main weakness of A) segmented markets theory. B) expectations theory. C) liquidity premium theory. D) separable markets theory.

20. In actual practice, short-term interest rates and long-term interest rates usually move together; this is the main weakness of A) segmented markets theory. B) expectations theory. C) liquidity premium theory. D) separable markets theory.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter34: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 11PA

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